9911796707
TMI Blog1975 (1) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... he applicants contended that the aforesaid contract was an entire and indivisible contract for work and labour and that there was no sale of materials involved in it. By his order dated 10th September, 1963, the Deputy Commissioner negatived the contention of the applicants and held that the said contract was a composite contract consisting of two parts, namely, one for the sale of goods, namely, tiles, and the other for the services involved in the setting and polishing of tiles, and held that the sale part of the said contract was subject to the levy of sales tax at four naye paise in the rupee and general sales tax at 2 naye paise in the rupee under section 10 of the said Act. In appeal the Tribunal confirmed the view taken by the Deputy Commissioner of Sales Tax and dismissed the said appeal. From the said judgment of the Tribunal this reference has been made to us at the instance of the applicants, the question referred to us being, "whether, on the facts and in the circumstances of the case and on a proper construction of the various conditions of the contract, the Tribunal was justified in holding that the transaction in dispute was in respect of a divisible contract, a part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e execution thereof is merely incidental thereto. Where the intention of the parties is that goods should be sold and delivered and, in addition thereto, work and labour should also be done or carried out, the intention of the parties is to enter into two contracts, one for the sale of goods and the other for work and labour, even though these two contracts are embodied in one document. In such a case the contract is divisible and severable and the taxing authorities are entitled to treat it as such and to tax the sale part of the said transaction. Bearing these principles in mind we will now examine the contract before us. The contract between the parties which is contained in a letter dated 18th April, 1960, is on the printed form of the applicants containing the acceptance by the customer of the terms and conditions quoted by the applicants. The customer has signed the said letter on 18th April, 1960. So the contract was really entered into on the said date, though the judgment of the Deputy Commissioner and of the Tribunal both refer to the said contract as being dated 16th April, 1960, that date being the date put on the order form by the applicants when they sent the said le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved at the time of the delivery. Our responsibility ceases after the goods leave our premises or are delivered at Jamnagar, Bombay or Indore, as the case may be, either at the railway station or the bunder. Even in case of fixing contracts outside Jamnagar, Bombay or Indore, as the case may be, once the goods are delivered to the carriers either at the railway station or bunder, we hold no more responsible for any loss, destruction or damage caused in transit. All the goods are despatched at the purchaser's risk and uninsured. 9.. (a) We undertake fixing contracts only for the sake of convenience of our customers and so reserve a right unto ourselves to terminate the contract for the fixing of the tiles and to limit our liability for the supply of tiles only. In such cases costs of the supply of the tiles shall be ascertained by deducting the usual charges for fixing and polishing labour from the contract rate. (b) In fixing contracts sufficient space on the ground floor, say, a room with lock and key, must be given to us with facilities to stock tiles and other materials on site. These tiles, etc., shall remain there till the completion of the work at the risk and responsibility ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jamnagar, Bombay or Indore, as the case may be, once the goods are delivered to the carriers either at the railway station or port, the applicants are no more responsible for any loss, destruction or damage caused in the transit, all the goods being despatched uninsured at the risk of their customer. A more important term of the contract for showing what the real intention of the parties was is the condition contained in sub-clause (a) of the said clause 9 in which it is expressly stated that the applicants undertook fixing contracts only for the convenience of their customer and for the said reason reserved to themselves the right to terminate the contract for the fixing of tiles and to limit their liability to the supply of tiles by them only and that in the case of their terminating the said contract for the fixing of tiles and limiting their liability only for the supply of tiles, the cost for the supply of tiles would be ascertained by deducting the usual charges for fixing and polishing labour from the contractors. This sub-clause clearly shows that the contract was from its very nature severable and that an option was given to the applicants to sever it if they so desired a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailway station or the port, and even when the goods are kept in a room with a lock and key provided by the applicants' customer to enable the applicants' workmen to carry out the work of setting and polishing the tiles, the tiles would remain in the said room and on the premises where the work of setting and polishing is being carried out at the risk and responsibility of the applicants' customer even in cases where the damage or destruction to the tiles was caused by fire or any other accident. Relying upon the terms of payment set out in the said contract the Tribunal has held that 85 per cent of the amount payable under the said contract was the price of the tiles sold and delivered by the applicants to their customer because under the said terms 25 per cent of the amount was to be paid as advance while placing the order with the applicants and 60 per cent against delivery, the remaining 15 per cent being split up by the said terms into 10 per cent against setting and 5 per cent during polishing. Since the sale part of the said contract was worked out when the goods were delivered to the applicants' customer at Bombay either at the railway station or the port and at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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